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Why Shares of E Commerce China DangDang Inc. Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of E Commerce China DangDang Inc. (NYSE: DANG  ) gained as much as 10% today and finished up 8% on a broad-based gain by Chinese online retailers.

So what: With excitement building for Alibaba's IPO, other Chinese e-commerce businesses have seen a lift as Vipshop Holdings  (NYSE: VIPS  ) finished up 7.3% today as well. The three companies have moved in tandem at times as strong Alibaba results are seen as good news for the industry of which it controls 80%. With investors still unable to grab a piece of the online giant, Vipshop and Dangdang may be the next best substitutes for now.

Now what: There was no major news on Alibaba today, though a Reuters report last night underscored the opportunity in Chinese e-commerce, noting a KPMG report that said by 2020 the Chinese online retail industry will be larger than that of the U.S., Japan, Germany, the U.K., and France combined. That opportunity is likely to draw investment in China's aging infrastructure, assisting smaller players like DangDang and Vipshop along the way. Notably, shares of Dangdang and Vipshop sank more than 10% over a two-day span last week when Alibaba announced its IPO at a price lower than many analyst expected. The two companies report earnings later this week, but I'd also expect the two stocks to continue to track with Alibaba's fortunes in the near future.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

8/27/2015 4:01 PM
DANG $6.36 Up +0.36 +6.00%
E-Commerce China D… CAPS Rating: **
VIPS $19.89 Up +1.26 +6.76%